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Minnesota Legislature

Coal energy exemptions contested

Published (3/25/2011)
By Sue Hegarty
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Words mean something is a familiar phrase echoed in the Capitol, but according to one legislator, words in the Next Generation Energy Act are ambiguous and should be repealed.

Enacted in 2007, the law was designed to help mitigate global warming and passed

125-9 in the House with broad bipartisan support. Goals were established to reduce greenhouse gas emissions below 2005 levels — 15 percent by the year 2015 and 80 percent by 2050.

The act prohibits large new coal facilities until a statewide plan to limit greenhouse gas emissions is adopted, which hasn’t happened. However, the Public Utilities Commission may grant exemptions, which Rep. Mike Beard (R-Shakopee) called built-in “off-ramps.” These off-ramps are why some legislators supported the legislation. But now, differing opinions about how to achieve these exemptions prompted Beard to introduce HF72, a bill to repeal a section of the Next Generation Energy Act.

For example, a utility seeking an exemption must show the commission how it will offset current carbon dioxide emissions equal to or greater than the proposed emissions. Some of the ways to offset emissions include reducing them at an existing facility or by purchasing carbon dioxide “allowances” from other states. The commission then determines whether the offsets are “permanent, quantifiable, verifiable, enforceable, and would not have otherwise occurred” before granting or denying an exemption.

Maple Grove-based Great River Energy requested offset exemptions to import electricity from the new Spiritwood Station coal plant near Jamestown, N.D., scheduled to open next year. In August 2010, GRE requested the commission’s approval of its emissions offset plan, but environmental groups, such as the Izaak Walton League, Fresh Energy and the Minnesota Center for Environmental Advocacy, objected on the grounds that some of the proposed offsets would have otherwise occurred.

“We expected we would be able to use these offsets when we chose to go forward with Spiritwood after the statute was passed in 2007, but no one can agree on what the statute’s confusing offset provisions mean,” said Eric Olsen, GRE vice president.

The commission decided it needed more evidence and referred the matter to the Office of Administrative Hearings. A recommendation by an administrative law judge is anticipated by Sept. 19, 2011. Public comments are due in July and a final PUC decision is expected by December 2011.

Although the law is not an all-out ban on coal energy, Beard views it as a “virtual moratorium” and called it an “impediment to interstate commerce.”

The House Commerce and Regulatory Reform Committee approved his bill 15-6 earlier this month. Sen. Julie Rosen (R-Fairmont) sponsors the companion, SF86. The bills await action by the full House and Senate.

If enacted, the bill could have implications on the current proceedings and on the state’s energy policies, in general.

Rep. Bill Hilty (DFL-Finlayson) sponsored the 2007 legislation and said there are easier ways to resolve the GRE issue. The law only applies to facilities generating 50 or more megawatts. Although Spiritwood is a 99 megawatt facility, a portion of the electricity would remain in North Dakota.

“If they decided they were only going to bring 49 of those (megawatts) into Minnesota there wouldn’t be a problem,” Hilty said.

He believes the repeal may be part of a larger policy issue. “What I think this is really about is doing away with the requirement to come up with any kind of a plan to deal with carbon emissions,” said Hilty.

Office of Energy Security Deputy Commissioner Bill Grant said Minnesota has no need for more baseload electricity through the year 2024. “A single coal plant can undo and reverse positive trends toward reducing greenhouse gas emissions as the Next Generation Energy Act called for.” Grant is a former associate executive director of the Izaak Walton League.

But Rep. Joyce Peppin (R-Rogers) said federal projections indicate there will be a need for reliable, baseload energy by 2050. She and Senate Majority Leader Amy Koch (R-Buffalo) sponsor HF9/ SF4* a bill to lift the moratorium on nuclear energy construction, which is now in a conference committee to rectify differences between the House and Senate versions. Coal and nuclear energy are viewed as two baseload sources of electricity, unlike wind turbines that don’t generate electricity if the wind isn’t blowing.

“Don’t demand of renewables things that they can’t deliver,” said Beard. “The Next Generation Act depends only on fuels that are not quite ready for primetime.”

The commission is pursuing upgrades to existing nuclear power plants, hydro-electric power from Canada and a combination of renewable energy sources that are less expensive and have shorter lead time than coal power.

“The alternatives are simply faster and cheaper,” Grant said. “If we are serious about meeting the goals that the Next Generation Energy Act laid out, making sure that we are actually reducing carbon emissions as we move forward is critical to that progress. Otherwise it really makes something of a farce of the Next Gen Act.”

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